Nothing hazy about pot tax
Walsh aims high to avoid drag on cannabis coffers
Mayor Martin J. Walsh is urging councilors to tax legal weed to the max at every pot shop in the city as the nearly $2 billion Bay State marijuana market is set to sprout in July.
Imposing a 3 percent local option tax is also seen by the mayor’s camp as not enough to police the new industry, the Herald has learned.
“The mayor has proposed adopting a 3 percent local sales tax to contribute towards the funding the city of Boston will need to cover the annual cost of regulating, enforcing and education around recreational marijuana,” said Walsh spokeswoman Nicole Caravella.
Other cities and towns are also considering the added tax as they brace for recreational pot to be sold starting next summer.
“They’re going to look at Boston and say yes, we should get this on the books now so we’re prepared to start collecting when one of these opens up in our towns,” said Jim Borghesani, a pro-marijuana advocate who worked on the legalization campaign. “There’s going to be a great opportunity for profit.”
In a letter to the City Council, Walsh asks for councilors to allow the pot sales tax and to fix it at the “maximum-allowed 3 percent rate,” even though no shops have even applied and the state Cannabis Control Commission is still creating a framework for legalization.
“Although there are not yet any marijuana retailers in Boston, I recommend acceptance of this statute now in order to be able to tax such sales in the event that a marijuana retailer is licensed and located in Boston,” Walsh wrote in his message to councilors, who are expected to hear the measure today.
After voters legalized recreational weed last year, state officials created a system allowing for a whopping 23 percent tax on sales.
The state will take a 10.75 percent excise tax on top of the current 6.25 percent sales tax, but cities and towns can hand down their own tariffs as well — an overall sales tax of up to 3 percent on all gross sales. Communities can also create “host agreements” with individual shops that allow them to take an additional 3 percent of gross sales for up to five years.
And that could lead to millions of pot dollars pouring into city coffers.
City officials estimate collecting between $2 million and $3 million in sales tax revenue for fiscal year 2019 — the first full year of legal marijuana sales. Those dollars are earmarked for the general fund.
But those estimates are “very conservative,” Borghesani said. He said that based on Colorado’s sales, the slightly larger Bay State could see $1.7 billion in pot receipts — with a 3 percent sales tax bringing in $50 million. That would have Boston, with 10 percent of the state’s population, pulling in $5 million.
Borghesani predicted the city would be able to direct that money toward other goals instead of new pot-related costs.
“They won’t have to hire more police officers and city inspectors, that’s not going to happen,” Borghesani said. “It’s difficult to believe that these stores will impose a significant burden on a town, just the opposite — it will help generate new revenue.”
HASHING OUT THE DETAILS: Mayor Martin J. Walsh, above, is pushing to establish the city’s pot sales tax before shops open next year. Advocate Jim Borghesani, right, said getting numbers on the books will help prepare for a full rollout.